Banks are also lending less and less in Louviers

If real estate is good in Louviers, real estate professionals are worried about an increase in bank lending rejections. © Beatrice Cherry-Pellat

Morgan Leroy is real estate loan broker at the best rates a Louviers. From this summer he sums up his business in one sentence:

“We are no longer looking for the best rate, we are just trying to get credit for our customers”

Morgan Le Roy

Because in recent months, credit rates have been steadily increasing in banks. Still around 1% at the beginning of the year, they have now risen to over 2%. Added to the insurance and administration costs of the loan, credit rate tend to exceed the wear rate currently set at just over 2.5%

. This is why so many loan applications are now rejected by banks.

Too low a wear rate

But what is this wear rate that no first-time buyer has heard of? “This is the rate set by the Banque de France each quarter, explains Morgan Leroy. Protects customers ”.

Yet today, this protection rate that prevents banks from applying exorbitant credit rates is particularly hampering prospective buyers from joining. Because “the annual percentage rate (APR **) cannot exceed the usury rate. And from this summer this APR is close to the usury rate “, decodes the broker, specifying that” if the APR exceeds the usury rate, the loan is usurious and it is forbidden to grant usurious loans “.

The dropout rate is calculated each quarter by taking the average APR of the previous quarter plus one third. For example, if during three months the APR is 2%, 2.1% and 2.2%, the dropout rate for the next quarter will be 2.1% + 0.7 = 2.8%.

“What has been a problem since the beginning of the summer is the sudden increase in borrowing rates. Since the usury rate is calculated on the previous quarter, borrowing rates continue to rise and tend to exceed the APR “

Morgan Le Roy

Four wastes a week Thomas Gerbeau, real estate agentto the Address

to Louviers, confirms the problem encountered by future buyers: “A customer submitted a good file with guarantees, but it was rejected by the bank.”

However, he qualifies his remarks to the extent that the Louviers sector still remains an attractive area with many properties for sale: “For the time being, few questions have been turned down, but one wonders what will happen in October when the next rate of usury will be revised. If borrowing rates continue to rise, waste will accumulate “, fears Thomas Gerbeau, who calls for measures by the state,” in particular on the calculation of the usury rate “.

Video: currently on Actu

At the Best Rates, however, waste accumulates:

“Usually out of 70 files processed in the year, a broker records five rejections and, typically, it’s because the file isn’t solid enough. Last week a colleague of mine suffered four “

Morgan Le Roy

Change the borrower’s insurance In an attempt not to exceed this usury rate threshold, the banks agree change the borrower’s insurance

“The insurance offered by the banks has high rates. Since the beginning of the summer it has been possible to take out cheaper insurance, ”notes Morgan Leroy.

Real estate professionals also note that banks are more reluctant to grant building loans: “With the increase in commodities, the required loans are higher. A few months ago, it took an average of 1,300 euros per square meter to build it. Today it takes 1,700 euros ”, observes Thomas Gerbeau. Increase in materials and bank lending waste that also weaken the construction sector.

In this difficult context, real estate professionals want to remain optimistic and confident for the month of October: “We are waiting for the state to revise the calculation of the usury rate and increase it so that banks are less cautious in granting loans to borrowers.

* On 1 July 2022 the Banque de France announced the new usury rates: they rise to 2.60% for fixed-rate loans with a duration of ten to twenty years, and to 2.57% for fixed-rate loans with a duration of twenty years or more.

** APR is the all-in interest rate for a loan. In particular, it includes: The nominal interest rate (= the rate used to calculate the interest on your loan), administrative expenses, commissions paid or due to intermediaries in any capacity involved in the granting of the loan (example: broker), insurance costs and mandatory guarantees. (source: Bank of France)

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